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In one of the sadder riches to rags tales, we're reminded that even the wealthy aren't immune from financial ruin if they bet the wrong way on the economy.
Patricia Kluge
Patricia Kluge was introduced to a life made better by money when she married second husband John Kluge, at one time the richest man in the world according to Forbes magazine. When they divorced, she was known as the world's wealthiest divorcee.
Now 62, Kluge is claiming debts of between $10 million and $50 million and assets of only between $1 million and $10 million. She's been forced into foreclosure on her 45-room mansion in Charlottesville, Va., while Donald Trump has snapped up the winery and vineyard she and her third husband, William Moses, founded.
The catalyst for this hard crash was the same call to easy money that ensnared so many before the economy tanked: Kluge and Moses borrowed heavily to expand the business into a world-class winery. At the same time, they began developing a luxury-home community, Vineyard Estates, which plummeted in value when the housing crisis hit.
While some might find it difficult to sympathize with Kluge, her only crime is that she was overzealous in taking risks to build her business. And there's no joy in seeing someone lose it all so late in life. Now she and Moses are faced with trying to discharge debts and start over.
They're not alone. There's no shortage of stories about people who discovered the hard way that overleveraging is a gamble best left untaken. When economic times were good, borrowers assumed it would continue to get better and the payoff would be big enough to cover the debt and deliver a profit. When the economy crashed, the debt became too big to handle. Having more money in the game just meant a bigger fall.
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